Laurentian’s proposed plan of arrangement, which estimates most creditors will receive between 14 and 24 per cent of what they’re owed, is a “hard pill to swallow for creditors,” said the president of LU’s staff union.
A plan of arrangement is a plan put forward by an insolvent organization to pay out its creditors, and it must be approved by these creditors.
Laurentian continues to undergo court-supervised restructuring after declaring insolvency in February 2021, and filing for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA).
Former Laurentian faculty and staff who were let go as part of LU’s restructuring and owed severance pay, as well as retirees whose benefit program was cancelled, are among the university’s creditors.
“When we've talked to our legal teams, when this (a plan of arrangement) is done in the private sector, this is around where they end up being,” said Tom Fenske, president of the Laurentian University Staff Union (or LUSU)
“And so it is, I can imagine, as a creditor, very hard to take. I think the Steelworkers call the CCAA legalized theft, and I very much understand why they say that now after 18 months.”
A $53.5-million pool of cash for Laurentian’s creditors is to come from the sale of university real estate to the province of Ontario, as per an agreement this spring with the province. Exactly what real estate is to be included in this sale has not yet been revealed.
The sale of this real estate to the province must be completed within four years of the plan implementation. Similarly, the timeline to pay back certain creditors what they’re due under the plan is also four years.
Laurentian plans to pay back in full certain classifications of claims against the university, including those made by secured creditors and those owed vacation pay.
The balance of the distribution pool of funds “will be paid out on a pro rata basis” (meaning proportionately allocated) to the remaining creditors, who are referred to as “affected creditors” in the plan of arrangement.
These creditors “are expected to receive a distribution in the range of 14.1 per cent to 24.2 per cent of the amount of their Proven Claim,” said the documents filed before the courts.
The alternative proposed in the plan is a “liquidation scenario,” meaning the university would be shut down, with an estimated 8.5 per cent to 16.7 per cent of what’s owed being distributed to creditors.
Laurentian plans to seek a court order on July 28, authorizing it to call a meeting of creditors to be held on Sept. 14, in order to vote on the plan.
Provided the plan is approved by creditors at the meeting, a further court order will be sought by Laurentian on Oct. 5, which allows the plan to be implemented following satisfaction of certain conditions.
For the plan to pass, it must be approved by a majority of those affected creditors who are present at the meeting to vote. That majority must represent at least two-thirds of the total dollar value of the proven claims of those creditors present at the Sept. 14 meeting.
Fenske said LUSU will be spending time with members and former members who are creditors of Laurentian, helping them to understand the terms of the plan of arrangement, and how it affects them.
“Our future is in their hands,” he said.
He said some creditors will be paid out their vacation pay in full, but will only receive a small percentage of the rest of what they’re due.
As for the banks Laurentian owes money, Fenske said he hopes there’s been enough homework done by the banks that they’re not going to vote the plan of arrangement down.
“Because the idea of a bank shutting down a university in Canada when they're making record profits, I don't think is a positive for them,” Fenske said.
The vice-president of Laurentian’s faculty association said for its part, the union is still reviewing the hundreds of pages of court filings associated with the plan of arrangement.
The Laurentian University Faculty Association (or LUFA) has not yet come up with a recommendation for members and former members on the matter.
Louis Durand said the union will meet with creditors associated with LUFA on the plan of arrangement, likely in August.
He said while the union can make a recommendation to members, each creditor is free to vote how they like on the plan of arrangement.
Durand said LUFA would have liked to see a bit more in the plan of arrangement about what will happen after the CCAA.
Laurentian’s unions had demanded the departure of senior leadership with Laurentian, which was partially realized with the plan of arrangement.
The university’s president, Robert Haché, as well as its provost and vice-president, academic, Marie-Josée Berger, will be retiring prior to the exit from the CCAA.
Other demands by LUFA include ensuring a robust faculty complement, a renewed commitment to open and transparent decision-making and the best possible severance claims for faculty and staff who were terminated.
Durand said on top of the 110 faculty positions that were eliminated as part of the insolvency restructuring last year, another 20 faculty members have departed since, and have not been replaced by Laurentian.
“I have to say this is a real problem now,” he said, adding the issue of faculty complement is not addressed in the plan of arrangement document. “I hear it a lot - many students say I won’t be able to finish in four years. I don’t find elective courses. It’s more and more difficult.”
Heidi Ulrichsen is the associate content editor at Sudbury.com. She also covers education and the arts scene.
